Effect’s of Multinational Corporations to Their Host Country: A Case Study of De Beers in Botswana, Namibia, South Africa and Canada

Abstract

Objectives The main objective of this study was to study to the effects of a multinational corporation to its host country via a case study of the diamond industry company De Beers. This study seeks to identify the strategies and practices through which De Beers operates and furthermore, this study contributes to the larger discussion of the practices of multinational corporations in global business environment.

Summary De Beers has operated in diamond industry from the late 19th century, with first operations in South Africa and later expanding to Namibia, Botswana and Canada. Through aggressive growth strategies and highly effective marketing campaigns, De Beers achieved a practical monopoly position in global diamond markets which continued until the start of the 21st century. Due to its growth and success, De Beers has had a notable effect on its host country’s economy. These effects range from the relationship with the government (such as taxation, corruption and environmental standards) to other effects (such as effects to GDP, HDI and Corporate Social Responsibility practices)

Conclusions De Beers adjusts its practices according to its host country and adheres to the local practices instead of maintain a set of global standards. This means that in less developed countries with a lower level of legal framework, De Beers operates with less control and as such engages in unethical or illegal practices sch as transfer pricing or tax evasion. Furthermore, De Beers appears to support the status quo of the countries with higher levels of corruption as it can positively impact its business. This indicates that De Beers is a highly profit-seeking company, with its practices geared towards simple profit maximization. However, De Beers has maintained high quality environmental standards throughout its different operations, indicating a clear interest in developing its business in an environmentally responsible manner.